Alibaba Answeing SEC Questions, Facing Domestic Probe

After experiencing all the bells and whistles of becoming listed on the New York Stock Exchange in September, Alibaba Group Holding Limited BABA is now feeling the heat of being a public company. In the past several days, Alibaba has been facing scrutiny from both the U.S. Securities and Exchange Commission (SEC) and China’s National Development and Reform Commission (NDRC).
Trouble at home
Last Friday, the NDRC announced a new initiative focused on maintaining fairness in the Chinese e-commerce world. Although the NDRC didn’t specifically mention any names, Chinese e-commerce giants Alibaba and JD.com Inc JD are likely among the group that will be investigated, according to Forbes and Reuters.
The investigation centers around unique pricing scenarios that occur in the Chinese online market. For example, to participate on Alibaba’s Tmall on the November 11 Singles Day shopping extravaganza, Alibaba requires merchants to discount merchandise by at least 50 percent. Many merchants get around this rule by hiking prices in the weeks leading up to the holiday.
Trouble across the ocean
Alibaba is also facing potentail trouble on the other side of the Pacific Ocean. The SEC recently requested information from Alibaba regarding an official report issued by China’s State Administration for Industry and Commerce that was later withdrawn from “official document” status.
This time, Alibaba faces accusations of failing to prevent the sale of fake merchandise on its website. While Alibaba no longer appears to have any cause for worry stemming from Chinese regulators on the issue, the company’s listing on the NYSE gives the U.S. SEC jurisdiction over the company as well.